Keynote: Opportunities, Trends & Forecasts for O&G - Midstream/Downstream Projects and Workforce
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This document provides an overview and forecast of opportunities, trends, and projects in the oil and gas midstream/downstream sectors from 2015-2017. It summarizes that total investment in pipelines is forecast to be $106.96 billion, with the largest amount in 2017, while investment in production is forecast to be $65.82 billion, with the largest amount occurring in 2014. The document also outlines various LNG export terminal projects totaling $76.6 billion and increases in natural gas processing capacity requirements regionally through 2023.
Keynote: Opportunities, Trends & Forecasts for O&G - Midstream/Downstream Projects and Workforce
- 1. OPPORTUNITIES, TRENDS & FORECASTS FOR O&G – MIDSTREAM/DOWNSTREAM PROJECTS AND WORKFORCE Michael Bergen Executive VP, Industrial Info Resources KEYNOTE STRATEGIES & OPPORTUNITIES: MANAGING IN A TURBULENT OIL & GAS WORLD
- 2. Workforce Next Spring Summit – 2015 Present ed by Industrial Info Resources, Inc. Industrial Market Outlook
- 3. IIR provides market intelligence that can be leveraged across all departments Website Resources
- 4. IIR’s Industrial Market Coverage O & G PRODUCTION ONSHORE AND OFFSHORE OIL & GAS PROCESSING LNG EXPORT TERMINALS, GAS-TO-LIQUIDS O &G PIPELINES ONSHORE AND OFFSHORE CRUDE OIL, CONDENSATE, GAS & REFINED PRODUCTS O & G TERMINALS STORAGE FACILITIES, LNG RECEIVING & REGASIFICATION PETROLEUM REFINING (HPI) REFINERIES, LUBE OIL PLANTS AND ASPHALT PLANTS CHEMICAL PROCESSING (CPI) PETROCHEMICAL, AGRICULTURAL, INDUSTRIAL GASES, ORGANIC & INORGANIC CHEMICALS PHARMACEUTICAL & BIOTECH MANUFACTURING FACILITIES AND RESEARCH LABORATORIES ELECTRIC POWER GENERATION, TRANSMISSION & DISTRIBUTION METALS & MINERALS MINES, MILLS AND PROCESSING PLANTS INDUSTRIAL MANUFACTURING DURABLE AND NON-DURABLE GOODS MANUFACTURING FOOD & BEVERAGE PROCESSING & DISTRIBUTION/STORAGE FACILITIES PULP, PAPER & WOOD MILLS, FOREST PRODUCTS & CONVERTING PLANTS ALTERNATIVE FUELS ETHANOL, BIODIESEL, COAL GASIFICATION, FUEL PELLETS
- 5. Latin America 8,906 Projects $1.23 Trillion 18% Growth Africa 2,854 Projects $694 Billion 67% Growth Oceania 2,414 Projects $710 Billion 33% Growth Asia 37,744 Projects $6.66 Trillion 37% Growth Europe 14,855 Projects $2.14 Trillion 34% Growth North America 18,620 Projects $2.41 Trillion 15% Growth Worldwide Coverage Represents a 30% increase (Feb 2014 to Feb 2015). Flags Represent IIR’s World Regional Research Offices Our Global Reach 87,388 Projects in Progress worth $13.93 trillion Based on active projects with future completion dates and QC’d in the last 12 months Latin America 10,888 Projects $1.3 Trillion 17% Growth 4
- 6. 42% 37% 41% 28% 19% 30% 18% 17% 20% 29% 30% 29% 5% 6% 6% 10% 14% 8% 7% 10% 7% 5% 7% 7% 6% 4% 4% 5% 7% 4% 13% 16% 12% 13% 15% 15% 8% 8% 7% 8% 8% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2011 2012 2013 2014 2015 Pharmaceutical Industrial Mfg Food & Beverage Pulp & Paper Metals & Minerals Chemical Oil & Gas Power 65% 60% 67% 67% 63% United States How Has Industry Spending Shifted? Energy & Chemical Maintain 60+% of Industrial Construction Activity Pre-fallout observation $300 billion Proposed
- 7. Oil & Gas Production – Industrial Market Spending Driver 7 of the 12 Industries are benefitting from unconventional production Bakken, Eagle Ford, Permian, Utica Marcellus, Niobrara INPUT BENEFICIARIES OUTPUT BENEFICIARIES 6 Drill Pipe Fabrication Steel Pipe/ Tube Mills Fracturing Equipment Producers Proppant Producers High- Velocity Fluids Frac Sand Mines Midstream Processing Ethylene Capacity Storage TerminalsFertilizer Plants LNG Export Market Gas to Liquids Petroleum Refineries Manufacturing Electronics Ceramics Textile Micro-LNG Domestic Market Pipelines Automotive Downstream Petrochem Methanol Power Generation Production Field Still Viable with Low Crude Prices 2,558 Projects @ $182 billion 2007 - 2014 Paints Coatings Chemical Industry Rubber & Plastic Good ? ? ?
- 8. -1.5 -1 -0.5 0 0.5 1 1.5 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Global Supply / Demand Trends Versus WTI/Brent Spot Price IEA February 2015 WTI Spot $/bbl Brent Spot $/bbl Short Term Supply / Demand Outlook Marginal Price Increases 7 Demand>Supply Short Term Supply Trends • Crude prices stabilized following early Feb gains – Brent higher than WTI. • Price rebound off falling US rig counts and “opportunistic buyers” – Contango traders • US rig count declines not yet filtered into lower US production growth. • Global supply rose by 1.3 m/bpd Yr-on-Yr to an estimated 94 m/bbl/d in Feb. • Led by a 1.4 m/bpd gain in non-OPEC production. • US supply revised upwards by 300 k/bpd for Q4 2014 and Q1 2015 also revised up. • OPEC crude edged down by 90 k/bpd - loses in Libya and Iraq offset higher Saudi, Iranian and Angolan production. Supply>Demand Axis shows difference (mn/bpd) between global crude production and global demand. -ve indicates demand greater than daily +ve indicates supply volumes exceed demand. Mn bpd Sources: IEA, EIA Short Term Demand Trends • Global Demand bottomed out in Q2 2014 and since steadily risen. Yr-on-Yr gains of 0.9 m/bpd for Q4 2014 and 1m/bbl/d for Q1 2015. • Global demand forecast raised 75 k/bpd to 1 m/bpd. 2015 average to be approx. 93.5 m/bpd. • Global Refining throughputs raised for H1 2015 but annual gains are forecast to be down from 2.2 m/bpd in Q4 2014. • Storage build up in US, China, India, Europe, S. Korea, Africa, Japan (70% capacity).
- 9. North America Petroleum Refining Industry U.S. Crude Imports © 2015, Industrial Info Resources, Inc., 2277 Plaza Drive Suite 300, Sugar Land, Texas 77479 2,129 829 350 500 1,000 1,500 2,000 2,500 3,000 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 ThousandsofBarrelsperDay Crude Imports into the US Gulf Coast (PADD 3) Heavy Medium Light
- 10. Historically Competitive Gas Pricing Gas Fundamentals are Reshaping Gas Investment Strategies 9 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 2005M01 2005M07 2006M01 2006M07 2007M01 2007M07 2008M01 2008M07 2009M01 2009M07 2010M01 2010M07 2011M01 2011M07 2012M01 2012M07 2013M01 2013M07 2014M01 2014M07 2015M01 Natural Gas Prices 2005 – March 2015 World Bank Series1 Series2 Series3 Source: World Bank Pink Sheets Japan LNGEuropean Nat Gas US Nat Gas Variable Trending Divergent US shale supply providing cost advantage for US Chemicals Producers: Massive ethylene build out planned Export driven capacity US Lake Charles $3.5 UK $9.3 Belgium $8.9 India $14.3 Mexico $14 Brazil $14.2 Argentina $14.5 Japan $15 Korea $14.8 China $14.1 Spain $12.1 $7.16 Worldwide LNG Landed Prices Oct 2014 Versus FERC March 2015 estimates U$/MMBtu US Cove Point $2.8 Source: US FERC $2.7 $2.36 $6.63 $6.51 $6.92 $7.2 $6.9 $6.6 $7 $7 $6.79 But natural gas economics are changing. US cost advantage eroded / swing in naphtha based foreign crackers US domestic demand insufficient to absorb new planned ethylene © 2015, Industrial Info Resources, Inc., 2277 Plaza Drive Suite 300, Sugar Land, Texas 77479
- 11. $76.6 Billion LNG Export Industry Build Out Oil & Gas IndustryOil & Gas Production Industry Breakout 5.04 12.14 16.02 23.800.00 $0.63 $2.14 $13.56 $15.19 $7.74 $4.64 $0 $5 $10 $15 $20 $25 $30 $35 2014 2015 2016 2017 $DollarsinBillions Oil & Gas Production GTL LNG Company LNG Liquefaction Plant Location Cost 1 Cheniere Energy Incorporated Sabine Pass, Louisiana $9.0 bn 2 Sempra LNG Cameron, Louisiana $12.0 bn 3 Lake Charles LNG (Trunkline) Lake Charles, Louisiana $9.0 bn 4 Cheniere Energy Incorporated Corpus Christi, Texas $9.0 bn 5 Freeport LNG Development LP Freeport, Texas $8.0 bn 6 Golden Pass Products LLC Sabine Pass, Texas $3.3 bn 7 Annova LNG Brownsville, Texas $3.7 bn 8 NextDecade (Train 1 only) Brownsville, Texas $8.0 bn 9 Gulf LNG Energy LLC Pascagoula, Mississippi $8.0 bn 10 Dominion Transmission Inc Cove Point, Maryland $4.1 bn 11 Southern LNG Inc (Train 1 only) Elba Island, Georgia $2.5 bn What’s included in our forecast for LNG? GTL ? Sasol & G2X NGL Fractionation Bubble © 2015, Industrial Info Resources, Inc., 2277 Plaza Drive Suite 300, Sugar Land, Texas 77479
- 12. 155.0 160.0 165.0 170.0 175.0 180.0 185.0 190.0 195.0 200.0 205.0 64.0 65.0 66.0 67.0 68.0 69.0 70.0 71.0 72.0 73.0 74.0 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 ProcessingCapacity(inBcf) MonthlyProduction(inBcf/d) Natural Gas Production vs. Processing Capacity Monthly Production Processing Capacity - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 ProcessingCapacity(inBcf) MonthlyProduction(inBcf/d) Northeast Natural Gas Production vs. Processing Capacity Monthly Production Processing Capacity © 2015, Industrial Info Resources, Inc., 2277 Plaza Drive Suite 300, Sugar Land, Texas 77479 Oil & Gas Industry – Upstream/Midstream Natural Gas Processing Overcapacity?
- 13. Oil & Gas Industry – Upstream/Midstream Regional Need for Natural Gas Processing Capacity © 2015, Industrial Info Resources, Inc., 2277 Plaza Drive Suite 300, Sugar Land, Texas 77479 Total US Gas Production Pipelines – Oct. 2014 TIV 2012 $11.53 B 2013 $10.13 B 2014 $11.15 B 2015 $21.52 B 2016 $16.99 B 2017 $35.62 B Total $106.96 B Pipelines – Jan. 2015 TIV 2012 $11.53 B 2013 $10.13 B 2014 $9.27 B 2015 $7.29 B 2016 $27.39 B 2017 $27.81 B Total $103.28 B Production – Oct. 2014 TIV 2012 $15.26 B 2013 $8.45 B 2014 $13.82 B 2015 $13.86 B 2016 $8.38 B 2017 $6.03 B Total $65.82 B Production – Jan. 2015 TIV 2012 $15.23 B 2013 $8.45 B 2014 $14.23 B 2015 $7.69 B 2016 $4.79 B 2017 $11.29 B Total $67.4 B 1993 2003 2013 2023 BCF/d 45.7 49.0 66.3 84.7
- 14. Oil & Gas IndustryOil & Gas Industry – Upstream/Midstream Crude Oil Transportation Total Proposed Pipeline Capacity 18.9 Million Barrels © 2015, Industrial Info Resources, Inc., 2277 Plaza Drive Suite 300, Sugar Land, Texas 77479 October 2014 Miles TIV 2012 1,175 $4,554 2013 1,515 $5,234 2014 4,802 $8,961 2015 3,952 $8,893 2016 4,094 $17,831 2017 790 $395 Total 16,328 $45,868 January 2015 Miles TIV 2012 1,175 $4,554 2013 1,515 $5,234 2014 3,645 $9,600 2015 5,119 $10,249 2016 1,680 $24,460 2017 1,826 $11,077 Total 14,960 $69,436 15 MM BBLs of crude storage capacity was added in 2014 Transportation Costs (per barrel): Gathering Canada to Houston by Railby Pipeline by Pipeline by Truck $0.50 $2.00 $5 - 6.00 $12.00
- 15. Thank You! Upcoming IIR Industry Outlooks Chicago, IL – May 6th 2015 Jersey City, NJ – Sept 9th 2015